Fort Collins council backs Foothills Mall financing deal

Early morning vote clears path for massive redevelopment project.

May 8, 2013

Foothills Mall renovation plans are still in the works, albeit mostly behind the scenes. Representatives from mall owner General Growth Properties said they hope to have some plans and timelines to bring to Fort Collins residents within about 60 days.

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The Fort Collins City Council early Wednesday approved a financing package that paves the way for a $312 million redevelopment project for the mall, including $53 million in public financial assistance.

After pressing mall owners and developers to make multiple changes to their plans, the council voted 6-0 in favor of the plan.

Mayor Karen Weitkunat, who lives near the mall, was recused from the discussion and vote because of a possible conflict of interest.

Before finally voting on the plan just shy of 2 a.m., council members passed a series of motions amending the agreement. Many were aimed at making the developers’ plans more environmentally friendly.

The changes include requiring the developer to:

• Pay into the affordable housing fund, once it is established, or designate 5 percent of the project’s housing stock as affordable.

• Comply with the 2012 international building code

• Decrease the duration of the public improvement fee from up to 30 for as long as the bonds are outstanding, which is expected to be 25 years

• Recycle construction and deconstruction materials

• Use a single provider for recycling and trash-removal services to reduce the number of truck trips

• Have flexibility in locating the Foothills Activity Center, including other than on the mall property, within funding constraints

• Share the cost of renting a new location for the ARC thrift store with the nonprofit through the end of September, if necessary.

• Work with the city to pursue sustainable projects, such as changes to lighting.

Councilmember Ross Cunniff said the process of amending the agreement was unsatisfactory given the late hour, but he would “hold his nose” and vote for the agreement.

“Although I am uncomfortable, I don’t know that better deal is forthcoming,” he said.

Councilmember Lisa Poppaw was prepared to vote against the agreement before the details were changed to her satisfaction. But she was willing to work through the issues with the developer.

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“I feel like we did a really good thing for Fort Collins,” she said.

The mall’s developers – Alberta Development Partners and Walton Street Capital – have proposed rebuilding portions of the existing mall to create a 388,000-square-foot main structure. Combined with other buildings that would be on surrounding properties, the developer plans to build a total of 735,000 square feet of commercial space and up to 800 residential units.

The mall would feature high-end shopping, several restaurants, a multi-level parking structure, a movie and entertainment center, and a central courtyard that could accommodate large public gatherings.

The developers plan to start construction as early as June so it could open in time for the November 2014 holiday season.

The financing package calls for reimbursing the developers $45 million for infrastructure improvements and blight abatement around the mall. The developer also would be reimbursed $8 million for replacing the Youth Activity Center with a new facility and building an underpass of College Avenue that would connect the mall to the MAX bus rapid transit system.

City Manager Darin Atteberry said the mall’s redevelopment would be a top-notch project and serve as an economic catalyst in addition to bringing more revenue to the city.

“We believe this is going to have a ripple effect across the Midtown area,” he said.

Funding for the complex financial package would come from a property tax imposed by a Metropolitan District that covers land owned by the developer, a 1 percent public improvement fee shoppers would pay in addition to sales taxes, and property and sales tax revenue generated above base levels through tax increment financing, or TIF, a financing tool allowed by state urban renewal law.

The revenue would backed by $73 million in bonds issued by the Metropolitan District to pay for the improvements. The deal is structured to not put the city’s credit rating or spreadsheet at risk, said Mike Beckstead, the city’s chief financial officer.

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The redevelopment is expected to bring in more than $100 million in new sales tax revenue to the city, he said.

The project received a ringing endorsement from the business community, which called for restoring the midtown area as a regional shopping attraction.

The deal would be an investment in the community, said Ray Martinez, a former mayor who has done work for Alberta.

“This is a small window of opportunity you won’t get for a long time,” Martinez said.

But others said the package was too large and not necessary. Development will occur on the mall property over time, said Linda Stanley, a CSU research scientist.

“World-class” cities shouldn’t have to offer incentives to spur development, she said.

“It’s a bad deal for local taxpayers, it’s a bad deal for county taxpayers and it’s a bad deal for state taxpayers,” she said.

A point of contention is what is to happen with the ARC thrift store at the mall. The store has yet to work out a relocation agreement with the developer, and faces the possibility of having to pay rent at two locations.

More than a dozen supporters of the nonprofit urged the council to include consideration for ARC’s financial situation in the financing package.

Redeveloping Foothills Mall has been a longtime goal for city officials. While once a regional shopping center that attracted shoppers from out of state, the mall has been fading for years, with sales tax revenue steadily declining since 2001.

An urban renewal plan for the mall area was approved by City Council in 2007, but was shelved after the mall’s owner at the time – General Growth Properties – did not act on redeveloping the facility.